Could Ireland’s Future be O​utside the European Union?

By Patrick Reid

Ireland’s Place In Europe has shifted dramatically in the last three months.

In the immediate aftermath of the United Kingdom’s decision to leave the European Union three months ago, most of the media focus leaned on what impact the country’s impending exit from the bloc would have on its neighbours; on the United States; or on the change in dynamic between the major players in the West and the emerging East.

While the changing complexion of a macro-economical dynamic that has existed for decades is undoubtedly — and, perhaps rightly so, the talk at the head table at the G20 this week, on the other side of the world, away from the spotlight in Hangzhou, discontent with the status quo is stirring in Europe.

At face value, you could forgive an outsider for not thinking Europe appears much like a continent that has just dragged itself from the dank recesses that the last few years have offered. For many, it’s business as usual. When was the last time Greece was in the news for anything other than which island is the new hot spot to invest your credit union loan in? Or Portugal for anything other than their football team’s historic win at this year’s European Championships?

They say a week is a long time in politics. In the twelve weeks since the UK decided to part ways with an institution it has been a central player in for more than four decades a prime minister has left and been replaced, an opposition leader is — presumably — about to be replaced; and the United States found out that its next president will be one of two candidates.

While all of these events are going on, opinion in the UK’s largest and nearest trading partner, Ireland, has been steadily shifting. In early July, just after the UK decided to leave the European Union, four out of five polled by Ipsos Mori thought the UK was wrong to leave the bloc. Since then however, more questions have been asked.

The Irish already felt burned by Europe for having to bear, what in many eyes, was more than their fair share of the fallout from the banking meltdown in 2009/10. And just this week, the European Commission ordered tech giant Apple to pay the State €13 billion in back taxes.

 

Apple Ruling and Bad Blood

 

In a rare show of near-unity, the majority of the Irish parliament backed the minority Government’s decision to appeal the ruling, by a nearly three to one vote. Arguing that the ruling was a concerted effort by Europe’s top brass to undermine Ireland’s ability to set their own corporation tax rate — which at present undercuts most of the continent by about 10 percent, Ireland’s minister for finance Michael Noonan set out the country’s stall for an appeal.

Coming out all guns blazing, Noonan made an uncharacteristic attack on the EU’s elite, singling former French president Nicolas Sarkozy in particular. Noonan accused Sarkozy, who just last week announced his intention to run for president of France next term, of “an attempt to bully” Taoiseach Enda Kenny into giving up Ireland’s low corporation tax rate while bailout terms were being hashed out.

“I think that was a dreadful thing to do at the time,” Noonan said. “There are people still of the same view that Ireland is doing too well in terms of investment and that would like to change the 12.5%.” The finance minister went on to re-iterate Ireland’s commitment to a low corporation tax rate. “We stand by the treaty. It’s in our competence to set the rates and no bridgehead by any commissioner is going to change that.

“There is a lot of envy across Europe about how successful we have been in putting the headquarters of so many companies into Ireland.”

Bad blood between Brussels and an Irish government is a rare phenomenon, and the timing of the Apple ruling couldn’t have been worse, or more ominous. Warnings about a hazy and uncertain future run aplenty. This week, former UKIP leader and Brexit ringleader Nigel Farage warned that the Apple ruling is only the beginning, that the EU will eventually hook Ireland’s corporation tax.

Similarly, investment banking specialist Andrew Amoils, formerly of JP Morgan, told the Express that he expects Ireland to leave the EU in the next five years. Central to his argument were projections of more than three million migrants making their way to the country from the continent. Amoils also predicted a Dutch exit, in much the same timeframe.

 

Conventional Wisdom

 

While conventional wisdom would argue that a country’s ability to set its own tax rates is a staple of its sovereignty, the Lisbon Treaty and its predecessors — particularly the Maastricht Treaty, which in 1992 laid the foundations for the creation of the European Central Bank — have led to these time-tested red lines being blurred.

European Council president, Donald Tusk, who like his House of Cards namesake, prefers to pull the strings from behind the scenes, paid a public visit to Government Buildings in Dublin this week to discuss the fallout from the Apple ruling. Although the minutes of the meeting remain private, it’s believed that the Pole is in town to try to offer an olive branch after a turbulent week.

While large-scale litigatory disputes tend to boil down to nothing after years of endless appeals, it’s possible some scars will remain. It’s unlikely that any money will end up in the Irish purse at the end of the day one way or another.

 

Republican Re-alignment

 

While external factors weigh heavily on Irish minds, both political and proletariat, in Dail Eireann, a quiet political re-alignment has also taken hold. Gone are the days when Republican Sinn Fein marched in tandem with the United Left. Gerry Adams’ party, in a move to cushion their party from Brexit fallout, have gone full Republican. Predictably, the party, both North and south, leapt on the opportunity to call for a border poll in the wake of the vote in the UK. While it may appear logical that the North, having voted itself to remain in the EU, might want to join the Republic in order to safeguard its status in the single market, public opinion didn’t swing, and opinion polls showed little to no enthusiasm for removing the border.

Quietly distancing itself from its outward persona as an anti-EU, anti-establishment party, Sinn Fein hasn’t been found on its soapbox ridiculing water charges, property tax or any other rogue tax since before the Dail broke for the summer. Indeed, Adams, Sinn Fein’s president for longer than 30 years, recently told media that “I have never argued for Ireland to leave the EU”. This despite opposing both the Lisbon and Nice Treaties in recent times. In reality, Adams knows his party is faced with a stark choice: it’s the European Union or the Commonwealth.

While the country’s fate remains undecided, former Taoiseach Bertie Ahern recently threatened to return to politics if there is a vote for Ireland to leave the EU. Although it is unlikely that Bertie will have the public support to allow him to return to politics, it is also unlikely we will see a referendum in the lifetime of this government. Even though the prevailing notion is that the next referendum to be held in the country will be regarding the status of the 8th amendment, it too is unlikely to be held in the lifetime of this government, given that Ireland is currently being governed by a centre-right party, propped up by a mish-mash of independents and a second, large centre-right party. And though Ireland may or may not leave the EU, it’s unlikely that this question will be put to the people soon.

 

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